Mining resorts cannot bear the power pressure in winter, and Abkhazia has closed its mines one after another

According to Bitcoin.com, the authorities in Abkhazia, Georgia, have cut off the power supply to 15 mining farms. The total amount of electricity required by these closed mines is 8950/kw·h (kilowatt-hour, 1kw·h=1 degree), which is equivalent to the electricity consumption of 1,800 local households. The local government of Abkhazia, Georgia, called this move a "temporary measure to limit the power consumption of a certain category of users."

Abkhazia is an autonomous republic of Georgia (abbreviated as Abkhazia). After the disintegration of the Soviet Union, it established itself as the "Republic of Abkhazia", ​​but it has not been recognized by any country. However, this small autonomous country with a land area of ​​less than 10,000 square kilometers and a population of about 300,000 is one of the few mining sites in the world.

This is an important area for winemaking, with fertile land growing grapevines and other abundant crops. In addition, tourism is also an important source of income for the local people. Now, cryptocurrency mining provides Abkhazia with a simpler and more effective way to make money. People only need to have simple mining hardware facilities to subsidize their household expenses through mining.

According to the European Statistical Office, in the first half of 2018, the average household electricity consumption in Georgia was around $0.07/kw·h, and non-household electricity consumption was $0.06/kw·h. According to data from the U.S. Energy Information Administration (EIA) in October 2018, the average electricity price in the United States was $0.105/kw·h, 1.5 times the electricity price in the region. The average electricity price in Germany was $0.338/kw·h, more than four times the electricity price in Georgia. After the adjustment in 2018, the electricity price in Xinjiang, China, was only $0.048/kw·h (0.3336 yuan/kw·h).

Bitcoin.com cited a 2018 study showing that Georgia has quickly become a cryptocurrency mining "holy land" second only to China in terms of profitability. Especially in the second half of 2017, almost all local media reported on cryptocurrency mining in detail, including news such as "getting rich from mining".

In addition to the local cheap electricity, this is mainly due to the lack of mature regulations in the field of crypto mining.

The Abkhaz Autonomous Government also wants to attract more miners and cryptocurrency companies by taking advantage of low electricity prices, thereby bringing in more overseas investment. According to Bitcoin.com, even a political party in Georgia has been funding party activities by mining cryptocurrencies. The huge electricity consumption generated by crypto mining companies makes them uneasy.

According to statistics from the Georgian government, the two largest crypto companies, Geo Service and Bitfury, consumed nearly 450 million kWh of electricity in the seven months of 2018. Among them, Bitfury, a Bitcoin mining hardware manufacturer headquartered in San Francisco, consumed nearly 340 million kWh. Most of the mining farms in Georgia are also established by Bitfury. The Abkhaz Autonomous Government has begun to realize the need to establish cryptocurrency mining regulations.

At the end of December 2017, Abkhaz President Raul Khajimba also said at a government meeting that he was ready to draft a new law to legalize cryptocurrency mining and place it under state supervision. The power supply to 15 mining farms was cut off because the Abkhaz government was concerned about the nationwide electricity shortage caused by the drop in temperature.

Abkhazia’s state-owned energy company Chernomorenergo also recently said that due to the continued increase in cryptocurrency mining operations in the region, transmission lines and substations are already operating at full capacity, and unstable power grids may not be able to cope with peak consumption in winter. According to BitNovosti, Chernomorenergo’s general manager Aslan Basaria has been urging the government to develop a legal framework for cryptocurrency mining to avoid the risk of power mismatch.

On December 31, 2018, Abkhazia officially issued a bill banning crypto mining. According to cryptonews.com, the bill allows the country's state-owned energy suppliers, security departments and the Ministry of Internal Affairs to identify mining sites and force them to close, and bring "individuals and companies" who violate the bill to justice.

Georgia has always been a country that is friendly to blockchain and cryptocurrency. It is understood that Georgia has used blockchain technology in the fields of healthcare and education digitization, and is working hard to promote it in more areas. Georgian Prime Minister Mamuka Bakhtadze also said that Georgia is the first country to introduce blockchain technology into the public service sector. In addition, the country also has the idea of ​​issuing legal digital currency. According to Bitnovosti, Ardzinba, Minister of Economy of the Republic of Abkhazia, said at a press conference in June 2018 that creating a national digital currency is an opportunity that cannot be missed. He also said that the next step for Abkhazia is to introduce legal digital currency into the national economic system.

Cryptocurrency mining has provided Georgia with an entry point into the "cryptocurrency era." But now, due to the huge consumption of electricity by crypto mining, the country has to take "temporary measures to limit the electricity consumption of certain categories of users."

(Text/Chang Mingxing Source/PANews)